BILL ANALYSIS Ó
AB 232
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CONCURRENCE IN SENATE AMENDMENTS
AB 232 (V. Manuel Pérez and Alejo)
As Amended June 14, 2012
Majority vote
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|ASSEMBLY: |75-0 |(January 26, |SENATE: |37-0 |(August 22, |
| | |2012) | | |2012) |
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Original Committee Reference: J., E.D. & E.
SUMMARY : Removes the specific dollar-for-jobs and low- and
moderate- income ranking criteria in state law from the small
cities portion of the federal Community Development Block Grant
Program (CDBG). The change will result in conforming state
rules with federal law, allowing the California Department of
Housing and Community Development (HCD), the program
administrator, flexibility to choose among federal options for
determining the dollar-for-jobs and ranking criteria.
The Senate amendments make technical amendments including
clarification that CDBG state guidelines shall meet the minimum
requirements of federal statute for eligible projects that meet
national objectives.
EXISTING LAW :
1)Designates HCD as the administrator of the small cities
portion of the federal CDBG program.
2)Provides Legislative intent that funds be provided to small
and rural counties to encourage new housing and meet local
economic development needs.
3)Requires HCD to allocate no less than 51% of CDBG funds for
providing or improving housing opportunities to low- or
moderate-income households.
AS PASSED BY THE ASSEMBLY , this bill removed the more
restrictive $35,000 dollar-for-jobs state requirement and other
specific ranking criteria from the small cities portion of the
federal CDBG Program.
FISCAL EFFECT : According to the Senate Appropriations
AB 232
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Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : Existing federal law establishes the CDBG Program to
provide communities with resources to address a wide range of
unique community development needs, including affordable
housing, services to the most vulnerable, and job creation
through the expansion and retention of businesses. A grantee
must use 70% of CDBG funds for activities that benefit low- and
moderate-income persons. In addition, each activity must meet
one of three national objectives for the program: 1) benefit
low and moderate-income persons; 2) prevent or eliminate slums
or blight; and, 3) address urgent community development needs
posing a serious and immediate threat to the health or welfare
of the community.
Federal CDBG funds are allocated to states using two accounts:
entitlement and Small Cities. Entitlement funds are awarded
directly to cities with more than 50,000 residents and counties
with more than 200,000 residents. Small Cities or
non-entitlement funds are awarded directly to states for
distribution to cities with less than 50,000 residents and
counties with less than 200,000 residents.
With respect to these economic development activities, federal
regulations require HCD to meet a two pronged dollar-per-job
test: 1) a maximum of $50,000 per actual individual job, known
as the individual test; and, 2) a maximum average of $35,000 per
job statewide over a funding cycle, known as the aggregate test.
Under existing state law, however, businesses receiving a loan
through the CDBG Program must create or retain at least one job
for every $35,000. In other words, state law sets the maximum
for the individual test at the same level as the maximum for the
aggregate test. State law also requires HCD, when developing
scoring factors for CDBG economic development awards,
specifically to use the three national CDBG objectives described
above. This measure removes the more limited requirements from
the statute, allowing HCD the flexibility to more effectively
award funding for economic development projects across the
state.
Related legislation:
AB 1556 (Assembly Jobs, Economic Development and the Economy
Committee), which would have required grantees of CDBG funds for
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local revolving loan programs to contract with approved
financial intermediaries was held in Assembly Committee on
Appropriations in 2010.
SB 194 (Florez), which would have required local governments to
include representation from disadvantaged unincorporated
communities in their Citizen Advisory Committee was vetoed on
September 30, 2010.
In his veto message, Governor Arnold Schwarzenegger wrote:
This bill would establish, to the extent permitted by
federal law, requirements governing the use of a
citizen advisory committee (CAC) by a local
government that chooses to use a CAC in the course of
preparing plans for the expenditure of federal
Community Development Block Grant (CDBG) funds
received directly from the federal Department of
Urban Development (HUD). This bill is unnecessary.
The federal CDBG regulations already mandate a public
hearing with significant outreach elements as part of
the grant recipients' planning processes; further,
imposing a state requirement on a federal program
would be inappropriate and in fact may not be
permitted by federal law and regulations.
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090
FN: 0004341